Netflix has announced a $72 billion deal, to acquire Warner Bros., valuing it at $82.7 billion including debt, as AFROTECH™ previously reported. The transaction is anticipated to impact both the entertainment and technology sectors. Since the news broke, some observers, according to Fortune, have raised concerns about its impact on Hollywood, while analysts point to artificial intelligence and high-performance computing as key factors.
Melissa Otto, head of research at S&P Global Visible Alpha, told the outlet that discussions of the deal often overlook the role of Google and its tensor processing unit (or TPU) chips. TPUs, as Exhibit Magazine notes, are custom chips designed specifically for deep learning tasks.
“What TPU chips do really, really well is in the modality of video in generative AI,” Otto said, explaining that they essentially turn mathematical representations into moving pictures in much the same way graphics processing units, or GPUs, revolutionized natural language AI by tokenizing and modeling text.
“Instead of ChatGPT and text, think Gemini 3 and YouTube videos,” she added.
She also said, Generative AI will “create, remix, and personalize video content,” and Warner Bros.’ library could help train the next generation of AI models. To compete with Google’s rapid AI advancements and take control of its share of premium video at a competitive scale, now was the time to act.
“I’m sure that it’s feeding into the strategy,” Otto said. “If I were Netflix and I knew that Google, one of their formidable competitors, had this chip technology and was essentially plowing billions and billions of dollars into developing the infrastructure so that they could carve out the corpus of the video modality in generative AI, I would want to build a moat around my business.”
Fortune further notes that Netflix, which has typically focused on building its own content, is acquiring a studio with major franchises such as “Harry Potter” and “Batman.” The deal merges Warner Bros.’ content library with Netflix’s streaming infrastructure, which may support recommendation systems, advertising revenue, and AI-driven video development.
Financially, the deal is significant. Dave Novosel, a senior bond analyst at Gimme Credit, noted that Netflix will assume nearly $11 billion in debt and pay a high EBITDA multiple of over 25 times, per Fortune. According to the outlet, Barclays analysts also remarked on the size of the investment, saying they were surprised Netflix would spend more than $80 billion — and pay a premium — for an industry it had already disrupted. They questioned what issue or opportunity Netflix aimed to address that couldn’t have been pursued through its own growth.
Netflix co-CEO Greg Peters said that while many large media mergers have faced challenges, the company’s knowledge of Warner Bros.’ assets informs its approach to the acquisition, as Fortune notes.
The deal has also drawn political attention. President Donald Trump commented on the acquisition, noting Netflix’s growing market share and confirming a recent meeting with co-CEO Ted Sarandos, The Hollywood Reporter reports.
“It’s a big market share, so we’ll have to see what happens,” Trump said. He later added, “It could be a problem.”
Sarandos described the Warner Bros. acquisition as an opportunity for Netflix to expand its operations.
“I know some of you are surprised that we’re making this acquisition, and I certainly understand why. Over the years, we have been known to be builders, not buyers,” Sarandos told Wall Street analysts, per The Hollywood Reporter.
“We already have incredible shows and movies and a great business model, and it’s working for talent, it’s working for consumers, and it’s working for shareholders, but this is a rare opportunity and it’s going to help us achieve our mission to entertain the world and to bring people together through great stories,” he added.
